Enterpreneurs of Tamil Nadu’s textile opening up to idea of IPO

Over the last decade, only a handful of entrepreneurs in Western Tamil Nadu’s textile industry -KRP Mill, Ambika Cotton and Loy al Textile Mills being the prominent names have taken to Dalal Street and fared well after their IPO and sustained interest among investors over the decade. A strong domestic demand and a gradual increase in exposure to how the capital markets work appear to have pushed entrepreneurs towards the markets now.

The Western Tamil Nadu’s textile belt entrepreneurs who had till now banked on debt to run their privately held businesses are concertedly opening up to the idea of taking their companies public – thus changing the mindset of the state’s oldest business clusters.

The process was aided by two awareness sessions by NSE for its Emerge platform. One such meet, held four months back, had Chitra Ramkrishna, MD of NSE , deliver a talk to Tirupur’s entrepreneurs for months on why they should end their IPO drought.

Integrated firms manufacturing goods across the supply chain from yarn to finished apparel numbering close to at least 80 work out of Coimbatore, Tirupur and Erode. They boast fairly high levels of operating margins, international clientele like Walmart and Macy’s and strong business continuity typical of family-run businesses. But, have thus far held back their exposure to capital markets.

Tirupur based garment maker specializing in knitted apparel that began nearly with 40 workers and 24 sewing machines two decades back, now, it runs 3,600 sewing units, rolls out 40,000 pieces a day to Indian retailers and the ones in West and Australia.

Even though, it had entered the global markets nearly a decade ago, the thought of going public is discussed only now at Cotton Blossom. Milton Ambrose John, MD of Cotton Blossom said that lack of exposure limited the way they structured their companies – -it was either proprietary or the Limited Liability Partnership. Some extended it to Private Ltd companies. But now, globalization has expanded their horizons to the avenue of tapping public money . Secondly, in a competitive, volumes-driven business environment, a company needs to have a strong fund flow.

Peers like CBC Fashions, a 40-year-old manufacturer of knitted garments, now supplying to brands like Allen Solly , Peter England, and Alpine Knits of Tirupur, are considering it too. TR Vijayakumar, MD of CBC Fashions, said that at a time of high interest costs, capital markets are a great way to access funds. Moreover, clients would feel safer buying from a listed company.